Up to £300m in investment property assets are on the verge of sale in Northern Ireland as the sector marked a return to form in 2014.
According to agents Savills in Northern Ireland, there were £500m in investment property deals in the region in 2014 – a figure which does not include loan sales by banks to financial institutions.
Notable investment deals include the sale of The Obel in Belfast and Cityside and Shane Retail Parks – and all three were sold to US fund Marathon Asset Management.
Savills said it acted in 78% of the investment property deals, with the transactions’ total value nearly double on 2013.
The agency’s Northern Ireland director Ben Turtle said: “Putting all the loan sale activity to one side, the level of commercial property transactions is actually ahead of pre-crisis times.”
Savills had also acted in Project Swallowtail, in which a portfolio of shopping centres- including Forestside, Foyleside and Abbey Centre – were sold by John B McGuckian and Ken Cheevers.
South Belfast’s Forestside and Londonderry’s Foyleside were bought back by Kildare Partners, who are thought to be backers of McGuckian and Cheevers.
Mr Turtle added: “Retail seemed to be flavour of the month in 2014 but this year we expect to see demand across other asset classes, including office and industrial as well as retail.”
And he said Tesco’s well-publicised plans to sell property assets to raise money would apply to Northern Ireland, too.
Savills said jobs growth in Northern Ireland and momentum in retail had created attractive returns for investors.
Jobs growth of around 3.5% in the private sector had also had an impact on office lettings, according to Savills director, Neal Morrison.
“This has resulted in a significant reduction in the availability of prime office space in Belfast and will result in continued rental increases this year.”
He said rents of around £183/sq m (£17/sq ft) would be agreed in 2015.
Ross Davidson, principal at commercial property law firm RW Davidson, said 2014 would be remembered as a year for significant loan sales. Borrowers were widely affected by sales by Ulster Bank in particular, with loans taken out by Titanic Quarter Ltd now bought by Davidson Kempner following Project Achill.
“The final quarter of 2014 saw activity levels within the local commercial property market reminiscent of the boom years of 2006 and 2007. Much of this activity arose from bank-driven loan book sales which attracted the attention of overseas investors in our market for the first time,” he said.
He added that the first quarter of this year was expected to be “extremely busy”.
“We are likely to see a number of larger borrowers affected by the recent loan book sales seek to reposition themselves by negotiating refinancing deals with new lenders. We are also likely to see a further wave of properties being sold on the open market as the overseas private equity investors look to streamline their portfolios and generate a quick return on their investment.
“This should provide opportunities for local investors to acquire prime commercial property with the prospect of strong rental growth”.
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Caption: The agency’s Northern Ireland director Ben Turtle said: “Putting all the loan sale activity to one side, the level of commercial property transactions is actually ahead of pre-crisis times.”